Greek bank shares plunge for third day, drag down broader market

[August 05, 2015]  By George Georgiopoulos and Jeremy Gaunt

ATHENS (Reuters) - Greek bank shares sold off sharply for the third day in a row on Wednesday with buyers yet to emerge on a scale large enough to counter continued dumping of the stocks.

The losses follow a 50 percent plunge in the bank sub-index over the previous two sessions and dragged down the wider Athens market, where non-financials were generally outperforming banks.

The bank sector share index <.FTATBNK> was down 27.5 percent, closing in on the near 30 percent dives seen on both Monday and Tuesday, with millions of shares offered and no bids after early deals.

Shares of Alpha Bank <ACBr.AT> and Piraeus <BOPr.AT> effectively hit the daily loss limit of 30 percent, with peer Eurobank <EURBr.AT> down 26.7 percent and National Bank <NBGr.AT> falling 26.6 percent.

More than 8 million shares in Alpha and 2.6 million shares in Piraeus were being offered for sale, with no bids seen.

"So far buyers have not been keen to step in and try to catch a falling knife," investment adviser Theodore Mouratidis said. "There is a lot of automated selling (and) there is uncertainty in view of stress tests that will determine the size of banks' capital shortfalls."

Greek banks are in dire need of recapitalization after a flight of euros from deposits for most of this year and mounting loan impairments. But that will hurt existing shareholders, when it comes, by diluting the value of their holdings.

Banks comprise about 20 percent of the main Athens index <.ATG> and their continued plunge dragged it lower by 3.6 percent after a small opening gain.

The new price levels meant big losses for bank shareholders, including Greek rescue fund HFSF, which holds majority stakes in three of the four big lenders, hedge funds and other long-term foreign investors. Foreign market participants accounted for about 67 percent of stock market turnover on Tuesday, a senior Athens stock exchange official told Reuters.

Some shares in the Athens bourse's large-cap share index were rebounding, however, with 11 of its 25 constituent stocks scoring gains on Wednesday.

"The market is looking for the bottom. We are not far away from it," said Alexander Moraitakis, head of Athens-based Nuntius Securities. "But bank shares are still pounded by selling pressure due to dilution fears, given their need to recapitalize."

Tuesday's nearly 30 percent plunge wiped out 2.65 billion euros ($3 billion) of banks' market value -- more than enough to buy out Piraeus Bank  and Eurobank, two of Greece's largest lenders.

(Reporting by George Georgiopoulos; Editing by Jeremy Gaunt and Catherine Evans)

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